Alternatives to annual Performance Appraisals

Though some organisations are abandoning annual performance appraisals, our research shows that a better option is to enhance your process instead.   Firstly, review the purpose of why you have a performance appraisal system in your organisation. Then evaluate whether this purpose is being met and design alternatives around your current system to make sure it aligns with the purpose.

Generally, Performance Appraisals are meant to to motivate, direct, and improve the performance of individuals and organisations.  Is your current system doing this? What else do you want from the system?  Can it be improved in any way?  See below some of the ideas other organisations are implementing.

  1. Develop a feedback-rich culture that encourages all employees to give each other continual feedback. In the book Thanks for the Feedback: The Science and Art of Receiving Feedback Well Stone and Heen explain that people require three types of feedback: appreciation; coaching; and evaluation.  Performance Appraisals tend to group these all together so employees find it difficult to gain value from performance development coaching because they may feel criticised by evaluation.
  • What processes can you implement to help people feel more appreciated?

Check out these 101 Ways to Reward Employees (Without Giving Them Cash).

  • How are you making sure people are being coached for improvements rather than just being told to improve? What resources are available to managers to help them coach?  Here are 6 Ways to Turn Managers into Coaches Again
  • What other ways can you evaluate people and functions besides an annual review? Consider using metrics which are reviewed regularly to see how things are going.  These can be quantitative or qualitative. Give managers permission to assess performance more regularly.
  1. Make regular check-ins the norm

These allow time for behavioural change – discussing issues as they arise and offering more effective ways of doing things gives people the chance to try out a different technique and change their behaviour. Plus giving feedback and coaching in the moment helps make it more fair and real.  It avoids recency  and  halo/horn  bias ( where the appraiser’s rating is swayed by one recent and or good or bad event).  Read more about  5 Common Performance Appraisal Biases.  Make sure people feel comfortable speaking their minds by considering processes for honest communication.  Read about some ideas here.

  1. Try peer evaluations

Most people work with numerous others of all levels and functions, so one person cannot adequately rate another without lots of peer input. Peer evaluation is based on a consensus of individuals at the same level of authority as the people they are evaluating. The process facilitates teamwork.  Note: it’s important to avoid linking the results of peer reviews to pay increases, promotions or disciplinary actions.

  1. Assume that employees already know something about their own performance and implement self-assessment

People tend to have a pretty good idea of their own strengths and weaknesses.  Give them an opportunity to share it with you.  Managers can use this to start conversations about expectations and the match between their self-assessment and that of the organisation.  Provide a custom review form to each person based on  the knowledge, skills and behaviours needed to perform their specific job and interact successfully with others. Ask them to rate themselves in the areas included on the form and suggest their own ideas to make needed improvements.

5.    Implement regular Coaching Sessions

Coaching provides employees with support, feedback, challenges and guidance. It differs from a performance appraisal because it is ongoing. Instead of telling employees how to improve, it encourages them to figure out how to solve problems on their own and make necessary adjustments.

  1. Separate the discussions about performance from discussions about potential and future career plans. Consider two separate meetings.
  1. Review your recruitment practices

Spend more time on assessment, culture and fit to make sure very few low performers don’t make it into the organisation in the first place. Give your recruiters  a strong cultural framework and set of values to work from.

  1. Set and evaluate goals frequently. Companies that set performance goals quarterly generate 31% greater returns from their performance process than those who do it annually and those who do it monthly get even better results. This means employees get feedback on a continuous basis (most sales organizations work this way). Read our research for more details.
  2. Invest in leadership development. Being a leader and or manager is a tough job. Give yourself and your managers time and tools to develop. Click here for ACEVO Leadership programmes

Aspects of annual appraisal that you mustn’t loose

  • Let people know where they stand by doing a Performance preview – these can happen at any time and let people know that improvement is needed — on a daily, weekly or monthly basis.
  • Congratulate on progressive improvement.
  • Plan for career sideways or upwards movemen.t


Further articles on this topic can be found here.

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